Selling an Australian Property as an Australian Expat: What Expats Need to Know

If you’re living overseas and considering selling your home or investment property back in Australia, it’s essential to understand the financial, tax, and logistical aspects that come with selling while living abroad. Selling an Australian property as an Australian Expat can be both a strategic move and a complicated one. Here’s what you need to know to navigate the process smoothly.

Australian Expats can sell Property in Australia

Yes, you can sell property in Australia as an Expat. You don’t need to be physically present in Australia to do so. However, being based overseas does create additional hurdles, especially around taxation and documentation. That’s why it’s critical to plan ahead and get the right professional advice.

Your Residency Status may impact your decision to sell

Your Australian tax residency status at the time of sale and during the period you owned the asset determines how Capital Gains Tax (CGT) is calculated. To avoid surprises, consult a tax professional to assess whether you're a resident or non-resident for tax purposes before initiating the sale.

Understand the Capital Gains Tax (CGT) Concessions available to you

The are two major Capital Gains Tax (CGT) concessions set out in Australian tax law that allow sellers to reduce the capital gain on the sale of their properties. These include:

1.       50% CGT Discount

2.       Main Residence Exemption (MRE)

When selling an Australian property as an Australian expat, these concessions are not applied in the same way to non-residents, and your ability to access them is often reduced or entirely unavailable.

50% CGT Discount

The 50% discount allows eligible individuals to reduce the capital gain on an asset held for more than 12 months by 50%. However, non-resident Australian Expats are generally not eligible for this discount on capital gains accrued after 8 May 2012. Here’s how it works:

• If you're a non-resident for tax purposes when you sell an Australian property, you cannot access the full 50% CGT discount on gains accrued after 8 May 2012.

• You may still be eligible for a partial discount for the period the property was owned before 8 May 2012, and during periods when you were a resident for tax purposes.

  
  

This means the total CGT liability is calculated by apportioning the gain based on the time you were a resident vs. non-resident since acquiring the asset.

Main Residence Exemption

One of the biggest changes affecting Australian Expats selling property came into force in 2019, when the federal government removed the CGT main residence exemption for non-residents. Here’s how it works:

• If you're non-resident for tax purposes, you will not receive an exemption on the sale, even if the property was once your primary residence.

• There are very limited exemptions, usually only applying in cases of severe hardship (e.g., death, divorce).

  
  

The CGT is based on the entire gain from the date of purchase, not just the period you were abroad. Australian Expats may still be able to access the MRE in a partial capacity if sold as a tax resident in Australia under the “temporary absence rule”. This extends the MRE period for up to 6 years from when the property was first rented.

If you’re planning to return to Australia soon, it may be worth delaying the sale until you regain tax residency and qualify for the CGT exemption.

Understand the tax rates

Capital gains are taxed at foreign resident tax rates. For the 2024-25 financial year, the tax rates for non-residents are as follows:

• Income up to AUD 135,000: 30%

• Income from AUD 135,001 to AUD 190,000: 37%

• Income over AUD 190,000: 45%

  
  

As shown above, non-tax residents do not benefit from the tax-free threshold of AUD 18,200 that Australian residents do. Therefore, all income earned in Australia is taxable from the first dollar.

Consider Appointing a Power of Attorney

While you can manage most of the sale process remotely, it can be helpful to appoint a power of attorney in Australia to act on your behalf, especially for signing contracts or dealing with settlement logistics.

Choose the right Real Estate Agent and Conveyancer

As you won’t be physically present to oversee inspections, marketing, or negotiations, you need a team you can trust:

• A real estate agent experienced in working with overseas vendors

• A conveyancer or solicitor who understands cross-border transactions

  
  

Prepare for withholding taxes at the time of sale

Australian expats who are classified as non-residents for tax purposes are generally not eligible for a ‘clearance certificate’ under the Foreign Resident Capital Gains Withholding (FRCGW) regime. This means that, by default, 15% of the property sale price will be withheld by the purchaser and paid to the ATO.

However, in certain circumstances, such as when the sale is expected to make a small or no capital gain, or is being sold at a loss, you may apply for a withholding variation. If approved, this reduces or eliminates the amount that must be withheld. A tax accountant can assist with the process for applying for a variation.

Consider strategies to reduce the Capital Gains tax

Australian expats looking to reduce the capital gains tax (CGT) liability on the sale of their Australian property can consider several tax-effective strategies.

Make a Tax-Deductible Super Contribution: By making a personal concessional (pre-tax) contribution to superannuation, expats can reduce their taxable income, including any capital gains from the property sale. This can lower the overall tax payable in the relevant financial year.

Use the Carry-Forward Contribution Rules: If your total super balance is under the relevant threshold (currently $500,000), you may be eligible to use unused concessional contribution caps from the previous five financial years. This allows a larger contribution (up to $162,500) and thus a larger tax deduction in the year the property is sold.

Utilise Income or Capital Losses: Any carried-forward capital losses or current-year capital losses can be applied to offset capital gains, reducing the taxable amount. Additionally, generating deductible expenses in the same year as the sale may help further minimise the tax impact.

Conclusion

Selling an Australian property as an Australian expat can be financially smart, but only if you’re across the tax implications. As an Australian Expat, it’s crucial not to rush into a sale without realising the full CGT impact or forgetting to plan your tax strategy properly. Always seek professional advice from an Australian tax adviser, a specialist Expat Financial Adviser and a solicitor experienced in property transactions.

Runway Wealth Management is the trusted Financial Adviser to the Australian Expat community. Our tailored advice is backed by expertise, education and experience, which allows us to be at the forefront of Australian Expat Financial Planning.

If you would like to speak to one of our Expat Financial Advisers about this blog or if you have other queries, we would be more than happy to speak with you. Feel free to send us an enquiry through the ‘Contact Us’ tab provided in the below link:

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General Advice Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.